Sole Trader Expenses

ed6hellsfresh

Hi all,

I have just been reading through the revenue's guide to taxation for the self employed and I had a question about expenses that I am sure someone here can tell me about .

"You can claim for any business expense, which you have
incurred in order to earn your profits. These expenses are
normally referred to as revenue expenditure. Revenue
expenditure is your day to day running costs and covers such
items as:"

So for me, essentially a sole-trading graphic designer, would a new laptop and editing software qualify under expenses? Also if I needed to get a train to, say, Limerick to meet a potential client would this count?

Are there some invalid expenses which people routinely make the mistake of claiming for, and other valide ones which people forget to consider?

Thanks for the help

FusionNet

As far as I know and I dont know the thresholds but a laptop is an assest which is claimed over a period of years, where as a train ticket is an expediture which can be claimed straight away. Your accountant will help you with these at the end of a year anyways. You can claim VAT off all of them straight away. The reason the do this is so say for example you owe revenue ten grand income, what would stop you going out and buying ten grand worth of kit, then you'd owe revenue nothing!!! So they allow you to break that expenditure over a period so for example if you did that you could only claim one eight in the first year, one eight in year two etc etc...

ed6hellsfresh

Hi Fusionnet, the ony probs are that at the mo I am not VAT reg because I wont break the revenue level required this year, and I don't foresee getting an accountant this year, my accounts will be quite simple this year I reckon (could be wrong).

Travel is good anyway because it made the prospect of even getting a train across the country a bit expensive otherwise!

Eoin

You have to charge VAT once you get over that threshold, but you can still charge VAT if you wish, even if you are under that limit.

This might be worth your while, depending on what your expenses are. For instance, I think you can claim the VAT back on diesel. However, if your time is your main expense, then it may not be worth your while if you need to do the monthly(?) VAT accounts.

You can definitely expense your travel costs - including food and accommodation. If you work from home, then you should be able to write off a portion of your utility bills if they're in your name. If your mobile phone number is on your business card, then I think it would be reasonable to expense that as well. If you have a car, then you write off the occasional tank of petrol/diesel as presumably you drive to some customers.

I understand that a laptop is an asset that is accounted for over 3 years, so you can't expense it in one go. I don't know about software.

I don't foresee getting an accountant this year, my accounts will be quite simple this year I reckon (could be wrong).

You should be able to get someone to do your accounts for a couple of hundred euros, and there's a good chance that they will be to cancel out some of this cost by making sure you're claiming all that you're due.

Personally I would just get a folder and put in every receipt that is even somewhat related to your work. Let an accountant sort it out for you and submit your accounts, and let the revenue query them if needs be.

Axwell

Because you arent registered for VAT you cant claim back the laptop as expenses but you can claim back depreciation on it as equipment at the end of the tax year. If you were registered for VAT you could have claimed the VAT back on it but then you have to file your VAT returns all the time and charge clients VAT which obviously increases your quote etc. Starting out when you are trying to get work you are probably better off not being VAT registered as you can quote without VAT and your price will be better as you dont have as many overheads being self employed.

TheCostumeShop.ie: Ronan

Axwell wrote: »

Because you arent registered for VAT you cant claim back the laptop as expenses but you can claim back depreciation on it as equipment at the end of the tax year.

Nope thats not right, you can't claim the VAT on the laptop back if your not VAT registered, if thats what you mean. But a laptop is a fixed asset so you can claim the entire amount over 3 years with depreciation.

Also you can claim daily allowances when you have to go off to meet clients for more than 5 hours. This saves you saving every receipt for a sandwich.

Axwell

TheCostumeShop.ie (Ronan) wrote: »

Nope thats not right, you can't claim the VAT on the laptop back if your not VAT registered, if thats what you mean. But a laptop is a fixed asset so you can claim the entire amount over 3 years with depreciation.

I said he couldnt claim the VAT back on it as he wasnt VAT registered..not sure why you are correcting me

TheCostumeShop.ie: Ronan

Ah i mis-read it as "Because you arent registered for VAT you cant claim back the laptop as expenses" not "you cant claim back the (Vat on) laptop as expenses". Never mind, my bad.

ed6hellsfresh

Thanks for all the advice guys, you all know your stuff!

Out of interest is there a document where I can find all the terms and conditions on this? The document I read from rev had very broad outlines as to what was acceptable, not specfiying daily allowances if you are out for 5 hrs etc.

kenbrady

ed6hellsfresh wrote: »

Thanks for all the advice guys, you all know your stuff!

Never take what you read on an internnt forum as fact. Always check it out yourself.

TheCostumeShop.ie (Ronan) wrote: »

But a laptop is a fixed asset so you can claim the entire amount over 3 years with depreciation.

First off depreciation is an accounting term, it has nothing to do with revenue expenses.

If you buy the laptop as a fixed asset. You can depreciate it over how long you like. But that is not used to calculate the expense for the revenue.
You have to use capital allowances, this is fixed at 12.5% of laptop cost over 8 years.

Japer

eoin wrote: »

You can definitely expense your travel costs - including food and accommodation. If you work from home, then you should be able to write off a portion of your utility bills if they're in your name.

The revenue only allow expenses which are essential to the business eg you can only claim travel expenses if they are part of your business / if you would not have had to spend them if you did not have the business. Also, do not forget to notify your insurance company your house and car are used for business purposes and pay the increased premium. If you use your house for business purposes it may have other complications in the future eg rates, which business premises pay.

Eoin

Japer wrote: »

The revenue only allow expenses which are essential to the business eg you can only claim travel expenses if they are part of your business / if you would not have had to spend them if you did not have the business.

True - I was responding specifically to the OP's question about travelling to meet a client, so it was implicit.

Japer wrote: »

Also, do not forget to notify your insurance company your house and car are used for business purposes and pay the increased premium. If you use your house for business purposes it may have other complications in the future eg rates, which business premises pay.

Yeah, definitely always a good idea to check that your insurance cover is correct. If you're not transporting work equipment or doing sales rep stuff, then a normal policy should cover you - but definitely best to check.

Employer

Expenses that are exclusively for the business can be claimed, I don`t use my car exclusively but on ocasion I do get supplies so I put in one receipt for €50 to cover annual petrol costs, also ill put in a receipt for mobile calls for €30-40 to cover the annual mobile calls etc.